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The Evolution of Private Lending, and how it Benefits Investors

31 May 2013

It used to be that private mortgage lending was a quiet and unknown type of investment for investors looking to expand and diversify their portfolio. When there were options such as the stock market, mutual funds, GICs, and other types that were considered to be the safest and most secure, why would anyone bother with private mortgage lending? But now all of that has changed. After people watched the crash of the stock market in the States, and since any type of banking products come with much scrutiny, private mortgage lending has become one of the most popular types of investing there is. And it’s benefited the entire industry, and those in it.

As more investors begin to realize the profit that’s to be made in private mortgage lending, and as mortgage rules become ever tighter at the major banks, it’s left many home buyers looking for alternative options. And today, they are turning to private lenders for financing more than they ever have before.

But there’s another reason why the industry of private mortgage lending is growing, aside from just mortgage rules and the increasing popularity of the industry. That’s investors themselves. These individuals were once happy to keep the mortgages they invested in close to home, leaving some regions saturated with private lenders while others were still very lacking in the amount of private investors available for private mortgages. Today though, investors are starting to branch out all over the country. A private investor may want to fund properties in lucrative Fort McMurray, where home prices – and therefore interest rates – are higher.

Private mortgage lending is still of course, a very personal thing. Whether or not you want to fund a mortgage across the country will be a matter of personal preference; as will how many private mortgages you want to fund. But it’s clear that private mortgage lending is one of the top investment vehicles for investors today. And if the trends are any indicator, that’s one that looks as though it’s only going to continue for many years to come.

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